Kuwaiti investors who own 26,000 acres of land in Ayat, Giza, intend to prosecute Egypt in international courts. In comments to Daily News Egypt, Hany Sarie-Eldin, head of Sarie-Eldin and Partners Legal Advisors, said the move will thwart the government’s efforts to revive confidence in the economy.
Sarie-Eldin said: “The state’s lawyer in international arbitration is very weak, evidenced by the results of such cases against Egypt,” adding that Egypt needs to speed up settlements for all commercial and investment disputes before the economic summit scheduled to be held in mid-March.
The total number of cases brought against Egypt after the 25 January Revolution have reached at least seven involving demands totalling more than $20bn in compensation.
The Egyptian government requested nearly EGP 47bn from the Egyptian-Kuwaiti Company for Development and Investment as a price difference for converting the purpose of the Ayat plot from agricultural to residential, with a 25% down payment due and the remainder to be paid over five years. This was rejected by the company, and no new settlement has been reached.
Tarek Eissa al-Sultan, Vice-President of the International Holding Projects Group that represent with its subsidiaries companies the main contributor to the Kuwaiti side of the project, said in press statements on Sunday that prosecuting Egypt internationally came after the investors found an “unjustified disruption…and lack of seriousness” on the part of successive governments to resolve the fate of the Ayat area.
The dispute dates back to 2002 when the Egyptian government at the time agreed through a decision issued by former president Hosni Mubarak, to transfer ownership of the land to the Egyptian-Kuwaiti Company for Development and Investment, which is 90%-owned by Kuwaiti investors. The land was to be used for agricultural purposes at a price of EGP 200 per acre, but the company describes the price as higher than that of similar contracts.
The Kuwaiti company stated: “We cannot cultivate the land because the Egyptian government has not provided us with water as agreed upon, and the National Center for Planning State Land Uses recommended in 2007 that it be used for residential purposes. This was approved by the government before the uprising of 2011, but a Presidential Decree was not issued.”
The Egyptian-Kuwaiti Company for Development and Investment requested that it be supplied with water as agreed upon in order to cultivate the land, or that an agreement be made to convert the land to serve urban purposes with the company paying a fair value for conversion fees.
Egypt has suffered from a range of serious economic issues since the 25 January Revolution, including soaring unemployment, the exodus of foreign tourists and investors, and stalled growth rates, and court rulings have invalidated the privatisation of nearly 11 government companies, returning them to state-ownership. This has angered investors who have resorted to international arbitration against Egypt, threatening huge fines that cannot be borne by the treasury.
“Amicable settlements that do not harm serious investors nor destroy public funds are a positive step toward reassuring the international financial and business community and restoring confidence in Egypt’s investment environment,” said Sarie El-Din.
Egypt was fined $300m during a land dispute tried at the International Centre for the Settlement of Investment Disputes of the World Bank. This was followed by another centre ruling in Madrid that imposed a $530m fine on the country for the Ministry of Civil Aviation/Ras Sidr Airport case.
Fakhry al-Faki, former Assistant to the Executive Director of the International Monetary Fund, said that foreign investors’ confidence has waned due to the slowness of the Egyptian government in settling investment disputes. He explained that the government must turn the page on investment conflicts in order to reassure investors and attract new funds to push along the development process in Egypt.
Source: Daily News Egypt
